Hitachi Construction Machinery

Global

Explanatory Meeting for the Third Quarter Ended December 31, 2011 Outline of Answers to Main Questions

Q: What is your latest global outlook for this fiscal year for demand of hydraulic excavators?

A: The demand in China is dramatically decreasing year on year due to financial tightening, etc, and the latest outlook for this fiscal year indicated a decrease of 30% from that of the previous year down to 79,000 units. However, the demand in other regions such as Asia and Oceania, as well as Japan remains solid; accordingly, we expect the demand to be 224,000 units in total.

Q: What are HCM’s strategies when the demand in China is decreasing and competition is intensifying such as now?

A: We do not intend to focus only on the market share. We will not ease payment conditions or decrease the sales prices even in these severe conditions. What we do is to provide quality and high performance products, as well as fulfill total product life cycle support from new machine delivery, through its maintenance, parts sales, serving much to improve customer satisfaction. This is how we position ourselves apart from the other competitors.

Q: What is the situation regarding the market for mining machinery?

A: Mining-related demand remains solid and our production is somewhat insufficient in meeting orders. We have already received orders for planned production for fiscal year 2012, and now are receiving orders for fiscal 2013.
Due to increasing sales in parts and services, our sales for the mining machinery related segment out of consolidated net sales are expected to increase to 18-19% for this fiscal year, compared to that of 16% in the previous fiscal. We continue to focus on the mining machinery business.

Q: How is the situation so far for the 4th Quarter?

A: In some parts of emerging countries, governments are still implementing financial tightening policies. However, machinery shipment to the Asian countries and North America, and high-margin parts and service business, as well as mining business remain solid.
In addition, among other efforts, we continue to decrease the costs of materials and reduce expenses, and implement other various plans; thus aiming to achieve the financial targets.

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